Any financing (other than the FHA-insured first mortgage)
that creates a lien against the property is considered
secondary financing and not a gift, even if it is a “soft” or
“silent” second (i.e., has no monthly repayment
provisions) or has other features forgiving the debt.
Documentation from the provider of the secondary
financing must show the amount of funds provided to the
borrower in each transaction and copies of the loan
instruments are to be included in the endorsement binder.
Costs incurred for participating in a down payment
assistance secondary financing program may only be
included in the amount of the second lien. FHA reserves
the right to reject any secondary financing that does not
serve the needs of the intended borrower or where it
believes the costs to the participants outweigh the
benefits derived by the homebuyer.
Permissible secondary financing arrangements include:
that creates a lien against the property is considered
secondary financing and not a gift, even if it is a “soft” or
“silent” second (i.e., has no monthly repayment
provisions) or has other features forgiving the debt.
Documentation from the provider of the secondary
financing must show the amount of funds provided to the
borrower in each transaction and copies of the loan
instruments are to be included in the endorsement binder.
Costs incurred for participating in a down payment
assistance secondary financing program may only be
included in the amount of the second lien. FHA reserves
the right to reject any secondary financing that does not
serve the needs of the intended borrower or where it
believes the costs to the participants outweigh the
benefits derived by the homebuyer.
Permissible secondary financing arrangements include:
| FHA Loan Programs |
FHA secondary financing
Guidelines
Guidelines
A. Government Agencies. Federal, state, and local
government agencies, as well as nonprofit agencies
considered instrumentalities of government (see B, below),
may provide secondary financing for the borrower's entire
cash investment.
government agencies, as well as nonprofit agencies
considered instrumentalities of government (see B, below),
may provide secondary financing for the borrower's entire
cash investment.
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